7/23/2007

Wal-Mart in price-cutting mode

No. 1 discounter, battling gas price pressures and housing softness, cuts prices on 16,000 products ahead of back-to-school season.


NEW YORK (CNNMoney.com) -- As Wal-Mart continues to struggle with soft sales amid a housing slowdown and gas price pressures, the retailer announced Monday that it will cut prices further on 16,000 items this week to spur sales for the back-to-school shopping season.

Wal-Mart (Charts, Fortune 500), the world's largest retailer, said in a statement that it hopes to save families with children 10 to 50 percent on school-related merchandise through its new discounts.

Wal-Mart said its plans are based on this year's report from the National Retail Federation, which says families on average will spend $563.49 on school-related purchases for their kids.

As part of the new price rollbacks, Wal-Mart said it offer customers 4 wide ruled notebooks for $1, a 10-pack of No.#2 pencils for $2, 2-pack erasers and 10-pack Bic pens for $5, a Texas Instrument or Casio scientific calculator for $10 and a week's worth of school clothes for $50.

"We know it's tough right now and Americans are looking to us to provide the best value, and we will," Bill Simon, Wal-Mart's chief operating officer, said in a statement.

"We'll continue to be more aggressive on pricing," said Simon added, "[We] already are working with key suppliers on upcoming plans for fall and holiday."

The retailer said in a statement it will change prices on a weekly basis, "depending on the seasonal need," and the top brands that customers want.

Sales of Wal-Mart stores open at least a year, a key measure of retail performance known as same-store sales, continue to trail same-store sales growth at its main competitor Target (Charts, Fortune 500), the No. 2 discounter.

Although Target is in the same discount category as Wal-Mart, its sales haven't been hit as hard as Wal-Mart's in recent months because Target appeals to slightly higher-income shoppers whose disposable incomes are less affected by gas price swings.

However, Wal-Mart surprised its detractors last month with better-than-expected June same-store sales, helped by strong demand for its expanded array of name-brand electronics, including the newly launched Dell computers and other flat panel televisions.

No doubt, Wal-Mart is eager to keep fueling last month's sales momentum heading into the important back-to-school sales season, which typically the second most-important selling season after the fourth-quarter holiday period.

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